Lowball Offers

Lowball Offers for Greater Vancouver Real Estate

Lowball offers

When the real estate market starts to slow into a buyer’s market, Buyers and their Realtors ® start considering “lowball” offers as a negotiation technique. But what is it, what benefit does it offer to buyers and sellers and how effective is it?

What is a “Lowball” offer?

While there is no standard definition, an offer may be considered “lowball” if it is 10% or more below the market price. Lowball offers are a fact of life when the real estate market is perceived to be declining. Buyers worry that the property they wish to purchase today will be worth less tomorrow, so they offer less than today’s market value to protect themselves against future declines.

Lowball offers are most commonly used as a tactic to put pressure on a seller who might need to liquidate assets quickly. Alternatively, prospective buyers might begin negotiations with a lowball offer to gauge the seller’s expectations.

When are lowball offers common?

Lowball offers are common whenever buyers are in short supply. Buyers may be hesitant to buy because of government action (e.g. introduction of the mortgage stress test, or the foreign buyers’ tax, the City of Vancouver’s Empty Homes Tax or the NDP’s Speculation Tax), rising interest rates eroding affordability, changes in immigration or many other reasons. In such situations, there are more sellers than buyers (it’s a “buyer’s market”), and sellers need to compete to attract buyer attention. Properties which are overpriced, not properly prepped for market or simply difficult to show will either receive no offers or only lowball offers.

As a Seller, how can I avoid getting a lowball offer?

Pricing becomes critically important in a buyer’s market! A competent Realtor ® can advise you how much your home is worth in today’s market – as opposed to what it was worth yesterday, or last year. Correctly priced homes have a far better chance of attracting serious buyers willing to pair a fair price.

Not convinced? Consider this: Canadians generally hate bargaining, particularly aggressive bargaining, as this is frequently viewed as rude and insulting. Most Canadians, when faced with an overpriced product, will simply walk away. Only those who, by upbringing or nature, have learned to bargain aggressively will make an offer – and those will typically be lowball offers!

What should a Seller do if faced with a lowball offer?

Follow the first rule of negotiating: don’t react emotionally! An emotional response will always result in much worse results than if you have ice water in your veins when evaluating offers. If you find that difficult, find a Realtor ® who is formally trained in negotiating (hint: most aren’t!).
A Seller should always provide a counter-offer, even to a lowball offer. Why? Because you don’t know how badly the buyer wants the property! If they are just trying to close a ridiculously good deal, and don’t really care about the property they land, they will likely walk away. However, if the Buyer loves your property, they will often be willing to negotiate to a price that is also acceptable to the Seller.

Don’t hesitate to reach out to me if you’d like to discuss!

Check our other blogs under Real Estate 101 – that might give you answers about buying or selling a home.

The information provided on this website does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available on this site are for general informational purposes only.